Monday, October 24, 2011

2012, here we come.... (#20)

"If there were any justice in the world the Greek bankers would be in the street marching to protest the morals of the ordinary Greek citizen." (Michael Lewis)

I've read up enough on the Greeks recently to have to resist the urge to get on the next plane to Athens and start chucking those petrol bombs back at them. And I'm not especially well disposed either to those masked Italian protestors brandishing 'We are the 99%' banners.

Lewis's book amply demonstrates the human need to pin the blame. His visits to countries affected by the current crisis, which he likens to financial disaster tourism, also show us that — depending not just on our political biases, but also on our national cultural backgrounds — we tend to look in different directions for our scapegoats. Only the Irish seem to have been collectively flummoxed by the question of who is actually to blame. For everyone else it is really simple: investment bankers, dodgy politicians, the 1%...not me. (Been thinking of getting myself one of these t-shirts.)

In truth cheap money brought out the worst in everyone, and what we have witnessed is perhaps the greatest flowering of human folly in the modern era. And to my mind a good deal of the populist protest sentiment, whether Tea Partyist or OWS, is just another expression of this absurdity, though one can appreciate the levels of frustration that seem rise in parallel with our collective improvidence.

Technological change has surely played a major part in all this, because it is that much easier to be immoral (or at least recklessly irresponsible) when you are sitting behind a computer screen. But lets not blame our tools eh?

Greece has had what Lewis describes as a societal level moral collapse, and when that happens there really are no political solutions, only cultural ones. And these are of course incredibly hard to introduce as piecemeal policy measures.

Of course Greece is only an extreme case of what has happened on a far more international level. Guatemala may not have been exactly flooded with cheap credit over the past decade or so, but it's hard not to examine the state of its political and social affairs without considering the wider context of a global ethical malaise. It's enough to make one turn to religion. Well, not quite.

Anyway, I'm not really buying the argument of Marshall Auerback (The Myth of Greek Profligacy, Counterpunch) that all attempts to paint the Greeks as deadbeats are "nonsensical propaganda, designing to justify the continued collective execution being inflicted on Athens for the sins of its father and grandfathers. As if Greece is the only country ever to cook its books in the European Union!"

Of course European monetary union has always implied a degree of book-cooking. But just to gain entry to the single currency Greece had to commit grand fraud — pretending that their budget deficit was 3% when it was in fact 15% — a situation which was only fully revealed once the IMF had had a chance to de-manipulate all the numbers and uncover some of the expenses which had been simply shifted out of the accounts to prepare the way for euro membership.

As with much of the sub-prime lending that went on prior to 2008, it must have been obvious to quite a few people (who should now feel thoroughly ashamed of themselves) that Athens was utterly crooked and therefore a very bad bet.

And some of the usual suspects from across the pond quickly became involved to make things even worse: Goldman Sachs reportedly took $300m in fees for fixing up some suspect loans which helped the Greek government to disguise its real level of indebtedness. The Wall Street men also taught the Greeks how to securitise future income streams from things like the lottery and motorway tolls, so they could spend cash up front from revenues yet to be received. As individual blame connected with collective blame, local blame duly connected with global blame.